Scenario 6-1
The price tag on a tennis ball in 1975 read $0.10, and the price tag on a tennis ball in 2005 read $1.00. The CPI in 1975 was 52.3, and the CPI in 2005 was 191.3.
-Refer to Scenario 6-1. In 1975 dollars, a 1975 tennis ball cost $0.10 and a 2005 tennis ball cost

Question

Quizplus · Accepted Answer

To compare the prices of the tennis balls, we need to adjust for inflation. We can do this by using the CPI values for the two years. We can calculate the price of a 1975 tennis ball in 2005 dollars using the formula: 
Price in 2005 dollars = Price in 1975 dollars x (CPI in 2005 / CPI in 1975)

So, the price of a 1975 tennis ball in 2005 dollars = $0.10 x (191.3 / 52.3) = $0.3658, which is approximately $0.27 when rounded to two decimal places. Therefore, a 1975 tennis ball cost $0.27 in 2005 dollars, which is less than the $1.00 price of a tennis ball in 2005. Hence, tennis balls were cheaper in 1975.

Scenario 6-1 The Price Tag on a Tennis Ball in 1975 Read